Company Act is a set of statutory provisions governing companies. This means that the Act adopts a “hard and fast” rule approach, rather than common law (although the Act is supplemented by common law as well). On 10th March 2017, the Parliament has passed the amendments to Companies Act which will come into effect on 31st Mar 2017.
1. Register of Registrable Controllers
2. Register of Nominee Directors
3. Removal of Requirement for Common Seal
With effect from 31 March 2017, companies, foreign companies and LLPs (unless exempted) will be required to maintain beneficial ownership information in the form of a register of registrable controllers (“RRC”), and to make the information available to public agencies upon request.
A. Who is a Controller?
A Controller is defined as an individual or a legal entity that has a “significant interest” in or “significant control” over the company.
A controller who has significant interest in a company may include a person with:
- Interest in more than 25% of the shares; or
- Shares with more than 25% of total voting power in the company
A controller who has significant control over a company is a person who:
- holds the right to appoint or remove directors who hold a majority of the voting rights at directors’ meetings
- holds more than 25% of the rights to vote on matters that are to be decided upon by a vote of the members of the company; or
- exercises or has the right to exercise significant influence or control over the company.
B. Important Notes You Need to Know about RRC
The RRC is a tool to maintain crucial information on the true ownership and controller of a Company. The aim is to enhance transparency in the ownership and control of corporate entities and further reduce opportunities for the misuse of corporate entities for illicit purposes eg Money Laundering and Terrorism Financing. The following pointers summarise the requirements of maintaining a RRC and how it impact you and your Company:
- Place to Keep Register: RRC must be kept at the Registered Office of the Company or the Registered Office of the Registered Filing Agent (“RFA”) if you have engaged an RFA to provide secretarial services to your Company. Example: ContactOne is a RFA registered with ACRA. ContactOne clients can keep the RRC at the registered office of ContactOne. This is a convenient and effective option as ContactOne helps the clients keep their secretarial records and fulfil filing requirements of the Company.
- No Public Access: The RRC is not meant for public access or viewing. This means that members of the public (like your customers, suppliers or creditors) cannot request for it nor find any RRC records via ACRA records.
- Allowable Access: The RRC is only allowed to be accessed by officers of the Company (the Directors and Company Secretary), the Registrar and ACRA officers as well as Public Agencies (eg law enforcement authorities such as the Commercial Affairs Department, Corrupt Practices Investigation Bureau and the Inland Revenue Authority of Singapore)
- Annual Declaration: Companies will have to declare with ACRA the location of the company’s register of registrable controllers when filing the company’s annual returns or annual declaration
- Discharging Obligations: The obligation of the Company is fulfilled so long as the Company Send Notices to the relevant parties (deemed Controllers) and recording their particulars, as well as sending further notices to any other parties that have been revealed as potential controllers. If the Company does not receive responses to the notice, it is not the fault of the Company..
- Format of Correspondences: Notices can be sent and replies may be received, in electronic or hard copy format.
- Information Accuracy: The Company is not at fault if responses from the recipients of the Notices provide inaccurate responses or fail to respond.
- Controller Details: A Controller will need to provide basic information to the Company.
- Penalty for Non-Compliance: The maximum penalty for non-compliance is S$5,000.
C. Information to Be Kept in the RRC
For Individual Controllers
- 1. full name (including aliases);
- 2. residential address;
- 3. nationality;
- 4. identification number e.g. IC or passport number;
- 5. date of birth;
- 6. date on which the person becomes, and if applicable, the date on which the person ceases to be a controller.
For Corporate Controllers
- 1. Name;
- 2. Unique Entity Number or other similar company identification number;
- 3. Address of registered office;
- 4. Legal form of the entity and the law by which it is governed;
- 5. The register of companies in which it is entered (including details of the state, country and the entity’s registration number in that register); and
- 6. Date on which the person becomes, and if applicable, the date on which the person ceases to be a controller
D. Tracing of Controllers
Tracing of a Controller can stop if it reaches an Individual or a locally registered Company or LLP.
This implies that if the Company has a complex shareholding arrangement via several layers of offshore corporate shareholders, the tracing of controllers can only stop when it reaches an individual or a locally registered Company or LLP.
E. Commencement of Register of Registrable Controllers
For Companies that exist before 31 Mar 2017, you have to start keeping the RRC by 30 May 2017, that is 60 days from the date of commencement (31 Mar 2017) of this ruling.
For Companies that are incorporated on or after 31 Mar 2017, you have to start keeping the RRC within 30 days from the incorporation date.
Failure to comply with the requirement to keep the RRC may attract a maximum penalty of S$5,000.
A. Who is a Nominee Director?
A director is a nominee if the director is accustomed or under an obligation whether formal or informal to act in accordance with the directions, instructions or wishes of any other person.
The person providing the directions and instructions to the nominee director is known as the Nominator.
Examples of Nominee Directors-Nominator relationship include:
- Individual providing nominee director services (Nominee Director) to a foreign business owner (Nominator) who is managing the Singapore registered company.
- Director (Nominee Director) appointed by shareholders and acts in accordance to the instructions and directors of the shareholder (Nominator)
- Father (Nominee Director) appointed by Son (Nominator) who is the Shareholder of the Company and acts in accordance to the instructions and direction of his Son.
B. Important Notes You Need to Know about RND?
You may refer to Section B, C and D in the Register of Registrable Controllers Section above as most points apply for the Register of Nominee Directors.
The only difference is that companies are not required to take reasonable steps (including sending out notices) to identify their nominee directors. In this case, the Nominee Directors are the ones who are obliged to inform their respective companies of the fact that they are nominees and provide the prescribed particulars of their nominators to their companies within the applicable timelines.
Nominee Directors are required to inform the Company of particulars of the Nominator within 30 days from the date they become nominees.
Rules relating to Location of Register, Public Access Limitation and Allowable Access are similar to those stipulated for RRC.
A. Important Notes You Need to Know about the Common Seal amendment
Effective 31 March 2017, companies and limited liability partnerships (LLPs) are no longer required to use the common seal in the execution of documents as a deed, or other documents such as share certificates.Companies and LLPs can execute documents by having them signed by authorised persons
Authorised Persons for a Company can be:
A director and the secretary of a company;
Two directors of a company; or
A director of a company in the presence of a witness who attests the signature